the first-time buyer

Twoand a half years ago, Shannon Houston moved out of her ex’s place and in with her parents. She had considered renting but decided she’d rather put her money toward a down payment on a place of her own. “I wanted to experience something that wasn’t student housing, or living in someone else’s house and not feeling like anything was mine.”

Then 30, Shannon had a great job as an associate at the Calgary office of a national law firm, but when she went to the bank she’d been with since she was a kid, they refused to give her a mortgage because she still had a student line of credit. “I was really disappointed. I’d been working hard to pay down my debt and had a guaranteed income, but they still said no.”

A trip to a mortgage broker yielded better results, and Shannon enlisted a real estate agent to help her find the perfect house. “I spent a long time deciding where I wanted to live—downtown near where I worked, or farther out where my parents and most of my friends are.” It was a year before she put an offer on a home. She looked at 30 or 40 places, and there were certain criteria she refused to give up on, including a yard where her Cavalier King Charles spaniel– poodle cross, Bali, could run around, and a large dining room where she could host family gatherings. It helped that while she house hunted, she lived with her parents and was able to both pay off her line of credit and build up enough for a down payment.

After she lost the first house she made an offer on, she saw a listing for a recently renovated two-bedroom townhouse that was near her family and only a 20-minute drive into the city. She put an offer in the same day. “I went in at the list price because it had everything I wanted,” she says. She ended up getting the house. “It was a long wait, but I’m glad I took my time. When I walk in, I feel like this is me.”

Money matters

Even though Shannon was careful about budgeting, she was still surprised by the extra costs that come with buying a home, including hiring a home inspector, setting up utilities and buying insurance. Then there were the things she didn’t anticipate. “I had to replace the upstairs toilet, which broke the night I moved in,” she says.

Costs vary by province, not to mention the size and condition of your home, but Kyle Stone, a Realtor in Calgary, says $3,000 is a safe budget in his city. (In Toronto or Vancouver, you’d likely want to budget a little more, while on the East Coast you can budget a little less.) He says a lot of people aren’t aware of expenses such as closing costs, lawyers’ fees and changing the locks. “And sometimes, mortgage companies make the purchaser pay for the appraisal on a new property,” he says. That’s the kind of thing you need to know before you sign any papers.

As for mortgages, Stone says it’s best to ask for options. “Just because you’re offered the lowest rate doesn’t mean that mortgage is best.” Instead, he recommends looking into an open-ended mortgage, which gives you the opportunity to make lump-sum payments over and above your monthly payments without incurring a fee. And don’t let your bank or broker talk you into using their mortgage insurance—get it through your life-insurance provider instead, he suggests. “If you get a mortgage through a bank or broker and something catastrophic happens, the insurance money goes directly to paying off the mortgage. If you get it through your insurer, you get to decide where it goes.”

Ona good day, it took Kisha and Paul Iachetta an hour to get from their jobs in Vancouver to their home in North Delta, B.C., where their two children also go to school. The couple’s biggest worry was that one of the three bridges they had to cross on their commute would be out (it happens whenever there’s a big accident, Paul says) and they wouldn’t be able to pick up their kids on time. They considered selling the home they’d had for five years, but they’d put a lot of work into it, renovating the house and landscaping the yard.

Then, six years ago, a boat hit the Knight Street Bridge, putting it out of commission for a week. “Getting home was a nightmare. That was when we made up our minds to sell,” says Paul, 40.

Once the house was listed, they started looking for their new home. “I wanted something that was close to the school in a nice neighbourhood and had at least three bedrooms and two bathrooms to fit our family,” says Kisha.

Things got stressful when they hadn’t received an offer on their current home after two weeks on the market. So they ended up dropping their asking price slightly, a strategy that worked—they got the offer they wanted. Shortly after, they found a home in Coquitlam. They left a week between the two closing dates to give themselves time to clean and move the clan in. To save money, they cleaned both homes themselves and enlisted friends to help with the move. Fortunately, the house didn’t need any work and they could settle in right away. “I love our cozy new home,” Kisha, 34, says. “I can look out the window and watch the kids go to the river.” Best of all, they can both get home from work in less than 30 minutes—and they don’t have to cross a single bridge!

Money matters

Timing is everything when it comes to making the most on your home, and it all depends on the market, says Randy Mann, a Realtor in Fraser Valley, B.C. In a seller’s market, it’s better to buy before selling. “If you sell first, by the time you start looking for another house, there’s a good chance your existing home will increase in value.”

If prices are dropping, Mann recommends selling first and renting while you watch the market. Still, Mann says to be wary of Realtors who urge you to sell no matter what. “They don’t have your best interests at heart. A good Realtor should explain the market trends and give you options.”

It’s also important to decide whether to keep your existing mortgage. Paul and Kisha decided to switch to a new mortgage to take advantage of a lower interest rate. “Many mortgages are portable, meaning you can apply your existing mortgage to the new home as long as your lender approves the new property,” says Janet Gray, an Ottawa fee-forservice financial planner with Money Coaches Canada. “Check to see if interest rates for a new mortgage are lower, but also look at your repayment terms and the length of time remaining in your term before you make any decisions.”

Giving

up the silver candlesticks, the artwork, the dining room set—that was easy. For Cathy Knight, 59, the hardest thing to part with was a rocking chair that had been a gift from her parents. Over the 37 years she and her husband, Darius, 62, have been married, they’ve accumulated a lot of stuff—so when they decided in 2014 to move from their 4,200-square-foot fourbedroom family home in Maple, Ont., to a townhouse half the size in Toronto, there was some major decluttering to be done.

The couple had moved before, but with three children, it had always been from one big home to another. Now, they wanted something smaller and closer to downtown.

Still, they talked about the move for two years before deciding the time was right. “By then, two of our children had moved to the west end of the city and we wanted to be closer to them,” Cathy says. “And our youngest daughter could live with us while she finished school.”

Once the decision was made, the purge began. “Getting rid of stuff took us months.” Most townhouses don’t have basements, so they knew they’d have limited storage. “Once you realize you can’t take it with you, you start learning to live without it,” Cathy says. Furniture that was too big to make it up the narrow stairs of the townhouse went to a secondhand store.

“It was tough, but we made the decision to really simplify our lives,” says Darius. The couple sold their home, then took their time planning their next move, researching locations and individual developers. “We didn’t want to make any mistakes,” says Cathy. “If we hadn’t found the perfect place, we would have rented for a while.”

Their townhouse has four floors, and their youngest daughter has one to herself. The location is convenient—close to the subway, 12 minutes from the airport and within walking distance of a Starbucks. “It’s exciting to live in the city where we don’t always have to get in the car to drive somewhere,” says Cathy.

Money matters

The Knights plan to live in their townhouse for at least a decade, and they may downsize again when they retire. A lot of people downsize and use the equity to enjoy their retirement, say Said Warde and Al Daimee, Realtors in Toronto, who prefer the term “smart-sizing.” A smaller property means there’s less upkeep, you’re taxed less and there’s usually an overall reduction in costs, says Warde. “Many people opt for condo living because there aren’t the same big-ticket surprise costs, like a repairing the furnace or cleaning up after the basement floods, which is appealing for those on a fixed income,” says Daimee.